EDITORIAL: The State Bank of Pakistan (SBP) released foreign direct investment (FDI) inflows of USD 1,474.2 million July-November 2026 (provisional data) against USD 2,151.9 million in the same period the year before with outflows estimated at USD 546.8 million as opposed to USD 909.5 million the year before. Privatisation proceeds for the two periods under review were inexplicably cited as zero, given that the Prime Minister announced the sale of the First Women Bank to an Abu Dhabi-based International Holding Company. It was valued at USD 14.6 million (approximately 4.1 billion rupees) though the actual sale price has not yet been disclosed. In this context, it is relevant to note that the International Monetary Fund’s second review of the Extended Fund Facility and the first review of the Sustainability Resilience Facility estimates FDI in the current year at 0.5 percent of Gross Domestic Product (GDP) against 0.6 percent last fiscal year but noted that Special Investment Facilitation Council (SIFC) is “vested with substantial authority to facilitate foreign investments,” and “operates with untested transparency and accountability provisions.” The Fund staff explicitly stated in the report that the government must identify foreign investment inflows through the SIFC and the grant/extension of any associated monetary and/or fiscal incentives. The Memoranda of Financial and Economic Policies commits the government to improve “efficiency and provide a level playing field for investment and to refrain from providing any new fiscal incentives such as tax breaks or subsidies (including on bank credit).” There is no doubt that the government has signed memoranda of understanding in excess of USD 25 billion; however, their conversion into binding contracts remains pending. There is overwhelming evidence that Pakistan’s geo-political relevance has increased manifold in recent months reflected by foreign visits by the Prime Minister and the Chief of Defence Forces; however, this has yet to translate into FDI possibly because the investment climate in the country remains unattractive. Till such a time as reforms begin to bear fruit it may be more appropriate to seek loan waivers or write-offs of past loans rather than insisting on FDI. The SBP noted that the current account deficit was in surplus in November; however, what is noteworthy is: (i) current account balance rose from positive USD 503 million July-November 2024 against negative USD 812 million in the same period this year; (ii) trade deficit (goods) rose from negative USD 9,799 million July-November last year against negative USD 12,769 million in the same period this year; (iii) trade in services registered negative USD 1,280 million last year against negative USD 1,316 million this year; and (iii) workers’ remittances rose from USD 14,767 million to USD 16,145 million this year — an inflow that the Prime Minister stated reflected “brain gain” rather than “brain drain” though, which as per the Fund report, remittance inflows are expected to move towards moderation. To conclude, the macroeconomic indicators have yet to provide evidence to back the government’s claim that the economy has moved out of its fragile state — an assessment that is backed by a rise in factory closures, an exit by multinationals after operating in the country for decades, a rise in unemployment and the failure of the private sector to raise salaries though the government has consistently raised salaries of the 7 percent of the total employed paid for at the taxpayers’ expense and the failure of the government to resist elite capture reflected most recently by the withdrawal of the April 2025 notification that gave an option to reemployed pensioners to either draw a pension or salary but not both. Copyright Business Recorder, 2025